Context: The purpose of the proposed Exploratory/Developmental R21 Grant is to pilot test a combined treatment of an antidepressant medication and cognitive-behavioral therapy for insomnia (CBTi) in patients with depressive disorders who have concomitant difficulty initiating and/or maintaining sleep. The proposed combined approach targets the patients' insomnia, because this common depression symptom is often associated with less favorable outcome of standard treatment and with increased risk of relapse. Specific aims: 1) To test whether the proposed intervention improves response to acute treatment (12 weeks) for depression, as measured the percent of patients who remit and the time course to remission, relative to the control treatment; 2) To test whether the proposed citalopram + CBTI intervention enhances longer-term outcome by reducing the proportion of participants who relapse during a 6-months follow-up phase, relative to the control treatment. Research Design and Method: In this prospective, randomized, controlled study, participants will be randomized to receive 12 weeks of acute treatment with the SSRI citalopram plus either CBTI or a validated, placebo psychotherapy for insomnia. Participants will be followed-up for 6 months after the end of acute treatment phase. Participants will be transitioned to community care during the first follow-up month. Participants: Participants will be 58 men and women ages 18 to 65 who 1) meet DSM-IV criteria for Major Depressive Disorder; 2) have a score greater than or equal to14 on the first 17 items of the 24-item Hamilton Depression Rating Scale (HRSD); 3) have difficulty initiating sleep (sleep onset latency > 30 minutes) and/or maintaining sleep (wake after sleep onset > 30 minutes per night at least 3 nights per week), to be confirmed by one week of sleep diary recording. Participants will also have to meet all study exclusion criteria. The ethnic distribution of the sample will be representative of the ethnic distribution in the San Francisco Bay Area. Women-to-men ratio is expected to be 2:1 as it is the case for depression. Main Outcome Measure(s): The primary outcome measures are the HRSD and the depression portion of the SCIDIV, to be administered at baseline, at the end of weeks 1, 2, 4, 8, and 12 of the acute phase, and at the end of 1, 2, 3, and 6 months of the follow-up phase. Other important measures include the Beck Depression Inventory (weekly), measures of sleep (diaries and wrist activity monitors, weekly) and measures of provider and patient expectations, adherence, and compliance. Expected Outcomes: We hypothesize that the group of patients who receive the combination of citalopram and CBTI will have higher remission and partial response rates following acute treatment and lower relapse rates during follow-up as compared to the group that receive citalopram and placebo psychotherapy for insomnia. The study will assess the feasibility and acceptability of the combination of the two treatments and will provide estimates of effect sizes, and attrition rate. The findings from the proposed pilot study will inform the design of a subsequent full-scale randomized controlled trial.